ET Now caught up with Shankar Sharma, Global Trading Strategist, First Global, for his take on today's market fall, current market environment, some sectors and stocks. Excerpts:

ET Now: I am sure you were not surprised by what happened on Friday?

Shankar Sharma: It does not give any pleasure to see a day like this. The markets can go up and down when a day like this happens. It makes you feel quite apprehensive about the situation in the country. Otherwise a routine bear market is all okay. It really does not matter much, but this is something different.

ET Now: What do you think is different about today's fall?

Shankar Sharma: It is not about today's fall. The bear market started in 2008. We are now seeing the beginning of it becoming a true bear market as opposed to being a stealth bear market. That is the big difference in today's fall versus whatever falls we might have seen after 2008. Till then there was still hope that the bull market was alive and people kept talking about that the mother of bull markets is ahead of us and all that, but the fact is that the bear market already started then. Today it is becoming manifest, it is becoming stark, it is becoming apparent.

ET Now: How ugly do you think it could get for us before we hit some kind of trading bottom?

Shankar Sharma: Why do you guys start talking bottom the first day the market falls? You do not start talking when will the market top out each time the market rallies 2%? So when it falls 2%, why do you keep start beating the drum of bottoms? Right now capital preservation is the only goal. Forget about bottom fishing and hitting the bottom and buying on dips and all those kind of statements. This is not going to end very soon. This is a global bear market in emerging market countries and India did not fall as much as the others did till a month-and-a-half back.

Now India is doing that while the others have kind of been sideways in the last couple of weeks. That is the way markets are. Not everything falls at the same time. So India has fallen later, but it is also going to fall as much as the rest of the camp.

ET Now: You have not liked banks in the past. After the recent RBI action and given what has happened to the rupee, has your bearish view on banks cemented further?

Shankar Sharma: Yes, those kinds of trades come once in five year, six years. It was like the intra trade of 2007-2008 when we turned bearish on infra. It was the telecom trade of 2007. These are secular compounding stories on the downside. So you can get a secular compounding story on the upside like Infosys in the mid 90s etc. Infra, telecom, now banks are secular compounders on the downside. From each level you will think that they cannot fall much and they will keep falling and the central point in all these plays is that they all have leverage. Banks are the ultimate leverage play because they have debt of 12 times, 15 times their equity. Leverage players in bear markets are absolutely sitting ducks for big-big falls. I have said this from March-April onwards that banks are the prime area where maximum damage would occur in the markets and so far that is pretty much what has been happening. ET Now: The price to book or the PE multiple whichever way you look at it, the Indian private banks are still very expensive, are still above the global average. So do you think the private end of the market has a long way down?

Shankar Sharma: Absolutely and I do not know whether you read my piece in a business newspaper recently or not, which was that you are going to see even profits for the private sector bank slow down. In fact, I think that they will be reversing. So you might see profit declines a few quarters down the road for all these banks because they have been making inordinate amounts of money relative to the quality of businesses that they have and those kind of aberrations do not last very long. It has lasted for seven years from 2004 onwards, but that story is also ending. So if you put everything together, banking is a highly leveraged play because that is the essential nature of the banking in economic downturn. Plus the fact that they have been making money hand over fist in a commodity business. All those things are pretty lethal cocktails.

ET Now: Do you think IT stocks could make money on an absolute basis, not on a relative basis?

Shankar Sharma: They might, just looking at the currency end of it. I do not think they are going to make you 50%, but they will definitely hold their head above water, which is more than what you can expect in most other sectors.

ET Now: So one is better off buying into defensives or one is better off even giving defensive stocks, in your assessment, some kind of skip?